Air Cargo as an Impetus for Economic Growth through the Channel of Openness : the Case of OECD Countries.

Abstract

Against the backdrop of a steep rise in the volume of air cargo, an ever expanding openness in trade policy, and increased international market integration, there is development of an empirical model for relationships to be examined between trade policy, air freight volume and per capita GDP openness. For the sample consisting of OECD member countries during the 1970-2002 period, Pedroni's panel cointegration test is used and fully modified OLS techniques are employed. Cointegrated relationship among these variables are fully supported by the empirical findings, with air freight shocks and positive trade accounting for marked real per capita GDP contributions. That air cargo is indeed an economic growth stimulation engine via the channel of openness is confirmed through a panel seemingly unrelated regression estimation. Important policy implications for policymakers emerge in sample countries from concrete evidence.